Krakatau Steel wins approval from stakeholders to build steel plant

State owned steel company PT Krakatau Steel (KS) has received approval from shareholders to build steel plant with a blast furnace in its industrial complex in the Cilegon industrial zone, Banten province.

Speaking to reporters after the annual shareholders meeting on Monday, KS' President Director Fazwar Budjang said that the blast furnace would have a capacity of 1.2 million tonnes a year. ?The blast furnace project will include the construction of a sintering plant, coke oven plant, iron ore material handling system and hot metal handling system,? he said.

He said that the company would use its long-term capital expenditure plan worth about Rp 5.19 trillion (1US$ = Rp 8,500) to build the steel plant.

The shareholders meeting also approved the company?s plan to seek long-term loan worth about Rp 4.18 trillion to finance the project. The construction will begin in the third quarter of this year and is scheduled for completion in the first quarter, 2014.

During the annual shareholders meeting, the company also received approval to distribute Rp 1.06 trillion in dividends. Of the total, Rp 956 billion will be distributed to founders and Rp 94.65 billion or Rp 6 per share to public investors registered as of July 1, 2010. The dividend will be paid in July 15. About 1 percent of the net profit or about Rp 10.62 billion will be allocated for partnership program and another Rp 21.25 billion for environment conservation program.

KS and South Korea?s steel giant Posco signed in August last year to form a joint venture to build and operate an integrated steel plant in Cilegon. KS and POSCO will invest up to US$6 billion to build the steel plant, which will be located near KS?s existing plant.

POSCO, the world?s third-largest steel maker, will have a 70 percent stake in the joint venture, while KS will have 30 percent with an option to increase its ownership to 45 percent a year after final acceptance certificate.

KS and Posco began in October last year the construction of their first steel plant in Cilegon in a ground breaking ceremony which was attended by KS?s president director Fazwar Bujang and Posco CEO Joon Yang Chung.

The steel plant which will occupy an area of about 3,800 sq meter near KS?s existing steel plant complex will have a production capacity of 3 million tons in the first stage. (giok)